How to redirect populist anger? Enact alternative minimum corporate tax
Musk gets a percentage of the cut (as do any employees with stock) for restarting the American ability to launch rockets. They did it nimbly and are able to control the agenda, rather than waiting for the government to do it. This is all according to a plan by NASA, which I contributed to, in the mid-1980s to increase private sector leadership in space exploration. The first product was United Space Technologies, which launched shuttles. This is phase 2. Wait until you see phase 3. For details go to http://spaceconsortium.blogspot.com/
Populism is more often the tool of the rich to keep the poor at each others throats (racism has always been a part of it) and to misdirect it into blind alleys rather than into real ownership of the means of production. This has been possible because the Left has never figured out how to attract workers. The answer is better cash and prizes for workers. We are working on it.
Higher tax rates on capital, including corporate profits taxes, pass through taxes, dividend taxes and inheritance taxes are usually borne only by the rich as an add on to any taxes they pay in salary as executives. The assets, physical and capital, are paid for with post-salary money. The theory is that if you earned $500,000 as a CEO, taxed at 37% and paid a 21% tax on dividends, that the actual tax rate is 56%. In practice, it does not work out that way.
That they are collected on the same form is what causes confusion. It also causes income shifting to capital. Taxes on capital are lower because they also compensate retirees, some of whom are not rich.
The AMT itself was designed to hit the very rich, not the middle class. Inflation and bad tax policy has resulted in a middle class income starting at $84,000. Anyone else is in the working class - and it is not until you get into the top 0.1% that households receive enough in dividends that they actually stop working.
Stressing taxes on corporations leaves out a large bit of capitalist exploitation. There are partnerships and sole proprietors who also take more of their share of value added or generated. Employees are underpaid for their efforts, regardless of how the business is owned.
"Taxing corporations" has become a way to go after capitalism without saying so, and doing it badly, because there is a stigma in denouncing capitalism itself. It is weak tea. It is time to shift to espresso.
A value-added tax taxes labor and capital at the same rate. They are the tax that the wealthy cannot dodge. The reality is that, whenever you buy something, you pay for the payroll (both income and retirement) that the workers and their employers pay on their labor.
VAT tax on employers can also be used to distribute income benefits for families in the paycheck, rather than on individual tax filings (which subsidizes tax preparers) or direct subsidies.
A separate VAT on capital returns and gains makes tax avoidance (common when using individual income tax forms to collect it) impossible. At the core, the conservative movement is about the ability to cheat on your taxes. It is dine and dash economics. Getting that unfair advantage is what the lobbyists are paid for, especially by the "idle rich;" those precious children who rich parents want to protect from taxation.
Taxing the sale of assets, with marking the tax owed to the market value of the asset ends the myth that we are taxing death, rather than heirs. It does not diminish assets kept in families (such as farms and businesses), while correctly taxing those who sell the business. Marking stock option exercise to market value (rather than taxing only the gains) also diminishes undue wealth accumulation.
I have a plan that ends income taxation for all but the highest salaried individuals. Combined with the economic effect of the other taxes, it essentially taxes millionaire salaries at 91%. This is high enough to cap these salaries and capital payments and force distribution of value added to employees, which has always been the goal of income taxation. For details, go to http://fiscalequity.blogspot.com/2020/10/attachment-tax-reform.html and the blog a whole. (Private to MSW, you should read and review the associated books, which are available on Amazon).
Social democrats have abandoned ending capitalism. I have not and neither have my colleagues, Richard Wolff and Gar Alperovitz. Bernie is a social democrat, not a real socialist. His supporters in DSA are wannabes. For details, go to Amazon.
The rate of capital taxation has been bouncing between 31% and 20% since the 1986 tax reform. Including surtaxes like Pease (which functions as an additional AMT) and Obamacare, the effect rate is about 24%.
The Ryan tax reform were an attempt to hit the middle, indicating that Democratic legislators were in on the deal, but reserved the right to make noise about it. Such deals are often made behind the scenes - something outsiders never realize. Biden wants to hit 28%. If he settles for 26%, the debate ends and all of those lobbyists have nothing to fight about.
The real victory (and it was bipartisan) was to move to a single rate for taxing capital. A single rate for all capital returns (corporate income, dividends, interest, rent, capital gains and pass-through income) ends income shifting. It is the essential reform to get to comprehensive tax reform featuring consumption taxes. Chairman Orin Hatch was publicly against value added taxes, so the reform was either snuck by him or done with a nod and a wink.
The best reform is bipartisan. Let us hope Biden goes that way, rather than stoking populist class warfare. Ultimately, this will benefit the precious children of the rich. The debt, which is the cornerstone of their wealth (it forms a solid floor for most investment accounts), cannot keep absorbing net interest costs, rather than paying them. Once they realize this, they will be on board with tax reform. See http://fiscalequity.blogspot.com/2020/09/attachment-who-owns-and-owes-debt.html
Compromise will stop funding of right-wing populism (the Tea Party, MAGA). It is amazing how populist leaders respond to money. Compromise helps workers, giving them a reason to step away from the populists. The next edition of my book on the debt will have more on this. I am waiting on the latest tax and debt data, which is late due to the virus.
Tax reform will also be the best way to sharply reduce the need for abortion services and the populist pro-life movement that is the glue that holds the Republican Party together. When racism became unacceptable in discourse, abortion became the populist issue. Trump was the return of racial populism (which was always below the surface - see the Hyde Amendment). Trump simply united the sentiments. The planned violent protests on January 20th are supported by more than we would like to think because they are seen as pro-life. Shame on the movement for going along. This is why Mayor Bowser is keeping the state of emergency active through the March for Life.